Walk-Away Point

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At one time or another all businesses will enter into Walk-Away Point agreements with another business. These deals are established when the vendors establish that they can work together to create the best supply chain solution and increase their sales volume or productivity in a particular market. The vendors then enter into negotiations to establish mutually beneficial contract terms for themselves and the businesses that they are purchasing from them. At one time or another the vendor will walk away from the negotiation table and the business would be better served by entering into a new agreement without them. Many businesses have learned that by engaging in productive negotiations they can sometimes eliminate or reduce the cost of Walk-Away Point arrangements.

When a business enters into a contract to buy goods from a vendor, it is common for the vendors to establish a walk away point which represents the entire inventory held by the seller. Because it does not matter whether the vendor is in direct possession of the goods or not, the negotiations at this point are about the price level and inventory availability for the goods. The Procurement Management professional that the business hire to facilitate the negotiations has a unique opportunity to influence the outcome of the negotiations. If the negotiator pushes for more inventory or a lower price than the seller is willing to establish a walk away point representing all the inventory that the seller has available.

If the seller is unable or unwilling to establish a walk away point prior to the negotiation begins then the company's experienced Procurement Management Professional will step in and influences the negotiation from the start. By establishing a strong starting point at the negotiation table the Procurement Management professional can often get the seller to agree on a price that is more than what was initially offered or a quantity that is greater than that originally negotiated. In either case the resulting contract is one that benefits both sides of the negotiation table. The key to success is knowing how to negotiate and how to position yourself as a professional Negotiator to get results that benefit you and your business.

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